Notes to Accounts of IFB Agro Industries Ltd.

Mar 31, 2013

1. Background and nature of operations

IFB Agro Industries Limited (the "Company") is engaged in the business
of manufacturing alcohol, bottling of branded alcoholic beverages as
well as processed and packed marine foods both for domestic and export
markets. The Company is listed in BSE and NSE.

2. The Company has discontinued the IMFL bottling business in West
Bengal during the year and has entered into an arrangement with a
bottling unit ("tie-up unit") in West Bengal for production and
marketing of its own IMFL brands. Similar tie up arrangements exist in
other states, namely Assam and Orissa .The production in the premises
of tie-up units under the said arrangements, wherein each party''s
obligations are stipulated, is carried out under close supervision of
the Company. The marketing is entirely the responsibility of the
Company. The Company is also required to ensure adequate finance to the
tie-up units wherever required. Though under the agreements, the
production and sale are accounted for by and in the books of the tie-up
units, the Company promotes its brands through these arrangements.
Accordingly, it is considered appropriate to disclose the following
quantitative and value information for the year, as furnished by the
tie-up units:

i) Profit from tie-up operations detailed as under is included in
''Other operating revenue''.

3. Related Party Disclosures

As per Accounting Standard-18 issued by the Institute of Chartered
Accountants of India, disclosures in respect of "Related Parties" are
as follows:- A. List of Related Parties: Associates:

Tax Act 1956 for 2005-06 and 2007-08 and under West Bengal VAT Act 2003
for the year 2005-06, 2006-07, 2007-08 and 2008-09 for payment of duty
including interest and penalty not acknowledged by the Company being
not sustainable in the Company''s considered view. Matter pending under
appeal with West Bengal Commercial Taxes Appellate and Revisional
Board/ Additional Commissioner of Commercial Taxes , West Bengal

4. Estimated amount of capital contracts remaining to be executed and
not provided for (net of advances) Rs 1,255 lacs (previous year Rs
14.99 lacs).

5. Previous year''s amounts have been regrouped/rearranged to conform
to the classification of the current year, wherever considered
necessary.

Mar 31, 2012

1.1 The Company announced a Voluntary Retirement Scheme (VRS) for the
employees of one of the units during the year. A sum of Rs. 285.95 Lakh
(Previous year Rs. Nil) has been paid under VRS during the year and is
included in "Salaries, Wages & Bonus"

Notes:

1. The Company's operations are diversified into two main business
segments, namely :

a) Spirit, Liquor and Spirituous Beverages comprising of Rectified
Spirit, Country Liquor and Indian Made Foreign Liquor.

2. Segments have been identified and reported in accordance with
Accounting Standard 17 Segment Reporting.

3. Segment Revenue in each of the above domestic Business Segments
primarily includes sales, processing charges and export incentives in
the respective segments.

4. Segment Revenue, Results, Assets and Liabilities include the
respective amounts identifiable to each of the segment and amounts
allocated on a reasonable basis.

2. The Company has entered into arrangements with certain bottling
units ("tie -up units") in Assam, Orissa & Bihar for production and
marketing of its own IMFL brands. The production in the premises of
tie-up units under the said arrangements, wherein each party's
obligations are stipulated, is carried out under the Company's close
supervision. The marketing is entirely the responsibility of the
Company. The Company is also required to ensure adequate finance to the
tie-up units, whenever required. Though under the agreements, the
production and sale are accounted for by and in the books of the tie-up
units, the Company promotes its brands through these arrangements.
Accordingly, it is considered appropriate to disclose the following
quantitative and value information for the year, as furnished by the
tie-up units:

iii) The balance due from tie-up units, of Rs. 572.52 Lacs (31.03.2011:
Rs. 402.36 Lacs) is included under "Advances" (Note 18). This is on
account of the financing by the company of inventories, debtors and
other current assets net of current liabilities on behalf of the units.

i) Show Cause Notice issued by Customs
Department against the Marine Division 210.53 210.53
of the Company. The Company had filed
suitable reply and also faced personal
hearing. The adjudication order is
still awaited. The Company is of
the considered view that the demand
is not sustainable.

ii) Demand raised by Excise Department
for payment of duty not acknowledged by 10.95 10.95
the company, being not sustainable in the
Company's considered view. Matter
pending with Commissioner of Excise,
Government of West Bengal.

iii) Demand raised by Sales Tax
Department under West Bengal Sales
Tax Act 1994 2564.88 906.47
for the years 2004-05, 2005-06,
2006-07, 2007-08 and 2008-09,
Central Sales Tax Act 1956 for 2005-06
and 2007-08 and under West Bengal
VAT Act, 2003 for the years 2005-06,
2006-07, 2007-08 and 2008-09 for
payment of duty including interest and
penalty, not acknowledged by the
company being not sustainable in the
Company's considered view. Matters
pending under appeal with
West Bengal Commercial Taxes Appellate
and Revisional Board/Additional
Commissioner of Commercial Taxes,
West Bengal

Total 2,786.36 1,127.95

B) Other moneys for which the company is
contingently liable

i) Letters of Credit issued by Bankers 1.60 114.91

ii) ESI liability for the period April
1997 - March 2011, pending renewal - 15.97
of exemption at Noorpur Factory

Total 1.60 130.88

C) Disputed income tax demand outstanding for the Assessment year
2009-10 is Rs. 914.46 Lacs (31.03.2011: Rs. Nil) which is not
acknowledged as debt by the Company and the appeal is pending for
adjudication before CIT (Appeals). Based on certain decisions of the
appellate authorities and the interpretation of the relevant
provisions, the company has been legally advised that the demand is
likely to be either deleted or substantially reduced and accordingly no
provision has been made.

Commitments:

Estimated amount of Capital Contracts remaining to be executed and not
provided for (net of advances) Rs. 14.99 Lacs (previous year Rs 770.55
Lacs).

5. In terms of Article 76 of the Article of Association of the
Company, Mr. Bijon Nag is a permanent Director of the Company. As he
does not seeks re-appointment by rotation, the Company is of the
opinion that the provisions of Section 274(1)(g) of the Companies Act,
1956 are not applicable to him.

6. As notified by the Ministry of Corporate Affairs of the Government
of India, revised Schedule VI under the Companies Act, 1956 is
applicable to all financial statements for the financial year
commencing on or after 1st April, 2011. Accordingly, the financial
statements for the year ended 31st March, 2012 are prepared in
accordance with the aforesaid revised Schedule VI.

7. Previous year's figures have been regrouped/reclassified to
conform to the current year's classification, wherever considered
necessary.

Mar 31, 2010

1. Share Capital (Schedule 1)

a) Out of the Issued and Subscribed Capital, 104,000 Equity Shares of
Rs.10 each were issued as fully paid Bonus Shares by capitalisation of
Reserves and Surplus in earlier years.

2. Secured Loans (Schedule 3)

a) Term Loan other than short term loan is secured by (i) exclusive
first charge on existing entire fixed assets and assets to be created
in the project of the Company, and (ii) second charge on the current
assets of the Company, (iii) Corporate Guarantee of one Associate
Company.

c) Export Packing Credits from Banks are secured by (i) hypothecation
of exportable stocks (ii) Personal Guarantee of one Director.

3. Deferred Tax

The break up of net deferred tax liability as at 31st March 2010 is as
under: -

31.03.2010 31.03.2009

Rs.000 Rs.000

Deferred Tax Liabilities :

Timing difference on account of

difference between Book

Depreciation and Depreciation

under

Income Tax Act. 93,948 90,473

Less: Deferred Tax Assets :

Leave Encashment (Tax Effect) 1,693 1,378

Net Deferred Tax Liability 92,255 89,095

4. Fixed Assets (Schedule 4)

a) The factory buildings at Noorpur and Dankuni, West Bengal have been
constructed on land leased/rented by associate concerns.

b) Companys Marine Product Processing Plant, Kolkata has been erected
on land worth Rs. 7,877 thousand, obtained under lease for ninety nine
years valid upto 9th August, 2093 through license from Calcutta
Metropolitan Development Authority, for which formal lease deed is yet
to be executed.

5. The Lease Agreement entered with Rajasthan State Electricity Board
(RSEB) expired on 28th February, 2004. In terms of the said agreement,
the residual value of the leased assets acquired from RSEB amounting to
Rs. 24,002 thousand is required to be adjusted against the
corresponding amount of interest free security deposit obtained from
RSEB. As Companys appeal towards certain claims against RSEB is
pending before the Jaipur High Court, adjustments as mentioned above
and further income arising therefrom, have not yet been considered in
these accounts.

7. Sale of Certified Emission Reduction (CER) has been accounted for
on execution of sale contract during the year which hitherto was
accounted for on cash basis in earlier years. The surplus of Rs. 36,829
thousand arising due to the fact stated above has been credited in the
Profit and Loss Account.

9. The Company had entered into arrangements with distillery tie-up
units in Assam, Orissa & Bihar for production and marketing of its own
IMFL brands. The production in the premises of tie-up units is carried
out under its close supervision. The marketing is entirely the
responsibility of the Company. The Company is also required to ensure
adequate finance to their tie-up units. Though

10. Pending renewal of exemption of the Employees State Insurance
Scheme at its factory at Noorpur since the year 1997-98, no deduction
or deposit in respect thereof has been made. (Please also refer to
Note No. 13(e)).

11. Compensation received towards higher transportation cost of
molasses has been recognized on a consistent basis as per procedure
followed by the Government towards granting rebate on excise duty
payable on matching concept basis and accounting convention followed by
the Company. Accordingly, the Company has recognized and adjusted Rs.
69,761 thousand (Previous Year Rs. 2,16,246 thousand) during the year
based on credit adjustment availed.

12. No supplier at the year end has intimated the company about its
status as a micro, medium or small enterprise or its registration
under Micro Small and Medium Enterprise Development Act, 2006.

13. According to the Company and in terms of Article 76 of the
Memorandum & Articles of Association of the Company, Mr Bijon Nag is
permanent Director on the Board of the Company. As this Director does
not seek reappointment by rotation, the provisions of Section 274(1)(g)
of the Companies Act, 1956 are not applicable to him.

1. Segments have been identified and reported taking into account, the
nature of products and services, different risks and
returns reporting systems.

2. Segment Revenue in each of the above domestic business segments
primarily includes sales, processing charges and export incentives in
the respective segments.

3. Segment Revenue, Results, Assets and Liabilities include the
respective amounts identifiable to each of the segment and amounts
allocated on a reasonable basis.